Critical Survey: NexGel (NASDAQ:NXGL) versus Neuronetics (NASDAQ:STIM)

Neuronetics (NASDAQ:STIM) and NexGel (NASDAQ:NXGL) are both small-cap medical companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Profitability

This table compares Neuronetics and NexGel’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Neuronetics	-43.47%	-156.36%	-35.69%
NexGel	-25.02%	-49.37%	-25.68%

Risk & Volatility

Neuronetics has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, NexGel has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.

Insider & Institutional Ownership

53.6% of Neuronetics shares are held by institutional investors. Comparatively, 2.2% of NexGel shares are held by institutional investors. 8.7% of Neuronetics shares are held by company insiders. Comparatively, 20.5% of NexGel shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Neuronetics and NexGel”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Neuronetics	$129.87 million	1.16	-$43.71 million	($0.82)	-2.78
NexGel	$11.67 million	1.73	-$3.28 million	($0.40)	-6.20

NexGel has lower revenue, but higher earnings than Neuronetics. NexGel is trading at a lower price-to-earnings ratio than Neuronetics, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Neuronetics and NexGel, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Neuronetics	1	0	1	0	2.00
NexGel	1	0	0	0	1.00

Neuronetics presently has a consensus target price of $7.00, indicating a potential upside of 207.02%. Given Neuronetics’ stronger consensus rating and higher probable upside, research analysts plainly believe Neuronetics is more favorable than NexGel.

About Neuronetics

Neuronetics, Inc., a commercial stage medical technology company, designs, develops, and markets products for patients with neurohealth disorders in the United States and internationally. The company offers NeuroStar Advanced Therapy System, a non-invasive and non-systemic office-based treatment to treat adult patients with major depressive disorder. Its NeuroStar Advanced Therapy System uses transcranial magnetic stimulation to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The company sells its products through its sales and customer support team to psychiatrists. The company was incorporated in 2001 and is headquartered in Malvern, Pennsylvania.

About NexGel

NEXGEL, Inc. manufactures high water content, electron beam cross-linked, and aqueous polymer hydrogels and gels. Its products are used for wound care, medical diagnostics, transdermal drug delivery, and cosmetics. The company was formerly known as AquaMed Technologies, Inc. and changed its name to NEXGEL, Inc. in November 2019. The company was incorporated in 2009 and is based in Langhorne, Pennsylvania.